An annual SMSF audit carried out for a low fee has often been interpreted as one that is substandard. John Munden points out this may not be the most accurate yardstick to use when assessing the quality of the process.

With some regularity, the SMSF sector looks at audit fees decreasing and draws the line that falling fees must mean corners are being cut. It’s an easy story to tell, but it’s the wrong one.

It is a discussion that will emerge more and more as automation eats into the manual processes and billable hours a business delivers. The conversation is already playing out in other areas, most visibly in software as a service, where vendors are on a frantic runway of evolution to protect their income as artificial intelligence fundamentally eats into the manual work that used to justify the price.

Software companies that priced themselves on seats and hours are scrambling to reprice around outcomes instead, because the old logic, that more people touching the work means more value delivered, doesn’t hold once a machine can do the touching.

Auditing is heading toward exactly the same reckoning and the sector’s instinct so far has been to read a falling fee as a warning sign rather than as evidence the old pricing logic is simply catching up with reality.

I’ve sat in enough rooms with SMSF auditors and administrators over the past year to know that price on its own tells you almost nothing about the quality of an audit. What tells you something is what’s actually happening behind that fee: whether the process producing it is disciplined and repeatable, or whether it’s held together by a spreadsheet, an inbox and whoever picked up the file that week.

Think about what an SMSF audit actually has to survive right now. The Division 296 measure has trustees reassessing structure and pension strategy. Capital gains tax cost-base adjustment elections are irreversible and fund-wide, which means the valuation work behind them has to be right the first time.

The ATO has significantly expanded its data-matching capability, which means the days of an audit file only ever being reviewed once, by the person who signed it, are over. An auditor doesn’t just need to reach the right conclusion anymore. They need to be able to reproduce, months or years later, exactly how they got there.

That is a documentation problem before it is a pricing issue. A higher fee is not, by itself, evidence of a better audit, just as a lower fee is not proof of a deficient one. An expensive but manual and inconsistent process does not necessarily provide greater assurance. Equally, a disciplined firm may use technology to classify documents, perform routine cross-checks and surface exceptions for auditor review, reducing handling time without decreasing the work required to support the audit opinion.

SMSF audits are increasingly presented as interchangeable products and compared on a single price, even though funds can differ materially in complexity and risk. Automation can make the repetitive elements faster and more consistent, but it does not remove the need for professional judgment, sufficient appropriate evidence, proper review or auditor accountability.

A fee that falls because a firm needs fewer manual hours to reach the same standard isn’t a discount on quality. It’s the market catching up with a cost base that has genuinely changed.

So, if price is not the signal, then what is? To this end, there are a few things I’d actually be asking if I was a trustee or a referring adviser choosing an auditor on more than just the invoice.

I would be asking what happens when a job gets reviewed twice. A defensible file should look the same whoever wrote it up because it is running through the same structured checklists and risk ratings every time. If the answer is “it depends on who did it”, that is the real red flag, not the fee.

I would also be trying to determine how far back the evidence goes: timestamps, version history, a clear record of who reviewed what and when. If a regulator asks a question about a decision made 18 months ago, the firm should be able to answer from the file, not from someone’s memory of the file.

I would be asking what the technology is actually doing and not what it is called. “We use software” isn’t a differentiator anymore. Whether that software is genuinely surfacing risk before a human opens the file, or just digitising the same manual process, is the difference that matters.

And I would be trying to establish what changed to make the fee fall. A firm that can point to exactly what automation removed from the file and show the quality of the review has not moved is telling you something very different from a firm that is simply charging less and hoping nobody asks why.

None of this means price is irrelevant. It means price is the wrong first question. The correct first question is whether the automation behind the number is rock solid. If it is, a lower fee is efficiency, not risk. If it isn’t, no fee is high enough to buy back the defensibility a firm hasn’t built.

The firms that do well out of the next few years of SMSF compliance won’t be the ones competing hardest on price. They’ll be the ones who’ve made that question easy to answer for a regulator, for a referring adviser and for a trustee reading their invoice and wondering what it actually bought them.